Bank of Montreal (BMO) is marketing its first Lock 'n Pay principal-protected note of the year.
The five-year income note, fifth in this series for BMO, pays an annual coupon linked to an equally-weighted underlying basket of 15 diversified stocks, nine US and six Canadian. The annual coupon is calculated as the basket's average performance, with positively performing stocks locked in for the remainder of the term at 7%. Negative performances of stocks that have not been locked in are taken as they are, subject to a -35% floor.
The Canadian bank first launched the Lock 'n Pay structure in June 2010. Similar offerings have followed every month except November. Target coupons have ranged from 6% to 8.5%, the SRP database shows, with tenors falling from six years to five for the two most recent tranches.
The underlying stocks of the seven component basket have changed a little thoughout the series. Canadian companies include Barrick Gold Corp, Shoppers Drug Mart Corporation and TransAlta Corporation, while US firms include Altria Group, McDonald's Corp, Verizon Communications and Wal-Mart Stores.
The note opened on 14 January and will close on 4 March and strike on 9 March . Minimum investment is C$2,000 ($2,010).
This note is now available now on the Canadian database.